Before we continue, I wanted to add one more thing to yesterday’s post and that is about beneficiaries. The beneficiary may be changed by the policy holder, unless the policy has a clause preventing it. Should a policy have such a clause, the beneficiary must agree to any changes made in the policy. Alright, now for today!
Insurance involves investment and investment involves money. If an insurance agent talks about a face amount, he or she is referring to the amount paid when the policy matures, that is, when the insured dies or reaches a certain age.
Insurance costs are calculated by actuaries, who are mathematicians educated in social statistics and probabilities. Actuaries consult a mortality table, which shows average life expectancy in a population, as based on statistics, health and lifestyle. Mortality tables are statistically based tables that show life expectancy, based on three main aspects: age, gender and tobacco use.
Before insurance is given to a person, an insurance company asks a range of health questions to calculate the person’s risks. These questions ask for information about a person’s lifestyle, such as tobacco use, frequency of alcohol consumption, any sports that the person is involved in; and if the person’s family has had any cases of severe illness, such as heart problems, liver problems or cancer. The evaluation and investigation of risk is called underwriting and is evaluated by person’s called underwriters.
It may all seem to be terribly complicated, but all you need to do is contact your independent insurance agent and he/she will be able to clear the path for you, without much problem at all!